In-House Inventory Management for Online Businesses

Many small or home-based businesses in Canada plan to keep their inventory in whatever space they can find or afford. It might be in a garage, basement, self-storage, or leased space in a warehouse. You may sell products from this location, or process inventory before it’s shipped to a fulfillment centre.

What may catch them by surprise is the need for automation, integration and syncing for most businesses that sell online. Software Path reports that only about 18% of small businesses use an inventory tool, while 43% don’t track inventory at all or they do so manually. That resulted in 34% of businesses shipping some goods late because they were out of stock, according to Peoplevox, and human errors that caused 46% of warehouse issues.

According to Upkeep, 75% of supply chain managers want to improve their inventory management process. Finances Online found businesses could gain a 25% productivity boost, 20% warehouse space increase and a 30% improvement in stock efficiency, just by utilizing integrated order processing.

In the digital world, your inventory must be continuously updated in real time. Not only is it required to fulfill direct sales, but also to sell through multiple channels (both online and offline). For example, you may need a bar scanner for new inventory and offline sales, website sales integration, and compatibility with Amazon, all to ensure your inventory is always updated.

What You’ll Need

As you consider your inventory management options, your main concerns should be budget, compatibility and functionality.

1. Many people use their phone or a tablet for everything from scanning new inventory to managing it through to fulfillment. Alternately, you can piece together a system using a bar code scanner and apps.

2. Databases for information storage are the foundation of a streamlined inventory process. These databases will contain information about your products, inventory, customers, and their orders (including payment and tracking information). Databases are usually part of software solutions, but sometimes small or home businesses start with basic spreadsheets and bring in software later.

3. Software that brings together all of the above information and facilitates automatic, real-time communication at every stage of the fulfillment process. This requires cross-platform compatibility.

For example, your ecommerce store has to be able to communicate with multiple platforms and software, including:

  • Fulfillment & shipping partners
  • Customer relationship management (CRM) software
  • Barcode scanners & point-of-sale (POS) equipment
  • Payment & accounting solutions

Setting up Storage

Whether you lease warehouse space or start in your garage, you’ll need to set up shelving that allows you to easily access your products when they sell. The shelves themselves should be sturdy enough to hold a large number of your products. Industrial-strength shelving is available at the consumer level in stores like Lowe’s.

Once the shelving is in place, you can devise a system that allows you to easily find each item. For example, you could label shelves by category, and then by size or colour. The location information might be recorded on your product spreadsheets or even be coded into your custom barcodes.

Scanning Incoming Inventory

You can use a barcode scanner or a Smartphone app to scan your products into inventory. Every item you offer for sale should have a product barcode, be it the UPC of the product or your own coding system. You might also add a custom barcode that provides additional information, such as where the item is located in storage. If you choose to use inventory software, much of this will be handled automatically.

Order Fulfillment

Once the order has been shipped, your inventory management will expand to include shipping information, such as the shipment tracking number. After that, information might be shared with accounting software and customer relationship management tools. Again, all of this is automated with the right tools, which will communicate with each other for easy oversight and management.

Inventory Management

Managing your inventory will also help you:

  • Secure and manage your supply chain, including backup suppliers and drop shippers.
  • Know when to liquidate excess inventory and avoid it in the future.
  • Identify, categorize and prioritize stock
  • Identify and monitor your top 20% profitable products.

The easiest way for online businesses to manage inventory (along with virtually anything else to do with online sales), is to build your business on an ecommerce platform like Shopify Canada. Their mobile app includes everything from a barcode scanner to shipping tools. Any functionality you require can be easily added through their app partners. The vast majority of software and apps integrate seamlessly with Shopify.

If you don’t want to go through Shopify, one of the most popular inventory management tools is ZOHO.

Proper inventory management can have a positive impact on your entire business, and could make or break it. It has become an essential part of ecommerce success.

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Digital Business & Marketing Manager at Online Business Canada | Website | + posts

Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In 25 years of working online, she has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available on Amazon.

Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on, and, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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